United Kingdom: Maintaining a \'Balanced\'

¶ … United Kingdom: Maintaining a 'balanced' attitude towards membership in the European Community

The recent international 'Greek tragedy' of debt and insolvency has caused many Britons to breathe a sign of relief that their country did not enter the European Union and convert to using the common currency of the euro. From Greece's point-of-view, entry into the European Community has been a disaster, albeit one partially of its own making. If it was not tied to the euro, Greece could have devalued its own currency, the drachma, as a way of minimizing its debt. A devalued currency encourages tourism and foreign investment. But as Greece is a full member of the European Community, it can only institute spending cuts to deal with its debt crisis. Fears of insolvency in other European Community nations such as Spain and Portugal mean that financial contagion could spread throughout the EU and affect even its stronger members, such as France and Germany.

The European Union has proven unwieldy in dealing with the split-second economic decision-making necessary to survive in today's global economy, particularly in regards to currency management. "The unity of the European Union is being sorely tested by a debt crisis in Greece and by the economic fragility of other countries. It took the Union weeks to agree on a multibillion-euro aid package for Athens, and it has still not managed to calm financial markets. Its ability to prevent contagion to other countries and hold the euro zone together is in question. Far from becoming a superpower, the 27-state group that grew out of the Economic Community is struggling to keep from sliding down the world rankings" (Heritage 2010).

Britain has always been a rather uncomfortable partner in the Eurozone. Despite the "tangible evidence on the trade-enhancing effects of a single currency," touted by Germany and France, it resisted giving up the pound (Islam 2003). "There were several reasons for Britain's reputation for "awkwardness," in joining the EU, most notably "domestic political constraints on the positions that British Governments could adopt" (George, 1998, p.225). Britons today still proclaim themselves British first and European either second -- or not at all European in their attitudes and financial philosophy. Britons have long prided their nation on being distinct from so-called Continental European culture. Moreover, there are "real problems for the British economy in adjusting to membership" especially the problems of Britain's reluctant contributions to the common budget of the EU and "an awkwardness on the part of British negotiators in handling the terminology of political debate that had developed among the original members" (George, 1998, p.225). The rhetoric of European commonality left many leading British political figures scrambling "to look first to the United States for partnership" rather than across the English Channel (George, 1998, p.225).

Today, the controversy over Greece has polarized some of the single currency's most stalwart supporters: the "episode has heated up the long culture clash between the European Union's traditional drivers: federal Germany with its Prussian attachment to rules and an instinctive frugality rooted in past economic traumas, and republican France with its tradition of state intervention and a more Mediterranean attitude toward public debt….If there is no political structure in place to safeguard the euro -- a weakness exposed in the current debt crisis…it was because Germany and France could never agree on one" (Bennhold 2010). Even supporters of the euro, in other words, have profoundly different cultural attitudes towards how the EU should be managed, as well as differ as to members' responsibilities regarding taking care of weaker states to stabilize the currency. This is particularly true regarding states that have not lived up to their part of the 'bargain' such as financially profligate and dishonest Greece. In Germany, the idea that financially conservative Germans might have to contribute to a bailout of a nation that 'cooked its books' has been difficult to sell to the public, and British politicians would have faced even more criticism, had Britons been forced to shed their beloved pound.

Great Britain can congratulate itself because it did not throw in its fortunes with the unstable euro, although some Britons protested this action at the time. British car manufacturers, for example, feared losing jobs to EU-member nations, and argued that refraining from participating in EU membership would make the cost of labor in Britain seem exorbitant: "Management and unions in Britain's embattled car industry joined forces…to urge changes in key European policies that might keep plants open and save exports and investment which are threatened by the high level of the pound against the euro" (White 2001). Nissan and Ford both stated that Britain's decision to join the euro would be a critical factor in whether they chose to remain in the UK (of course, Ford, due to its own financial woes, was forced to cut back on its international production for other reasons). When Tony Blair was promoting the single currency the Prime Minister was adamant: "Britain will be billions of pounds better off if it joins the European single currency, saving enough money over the next 30 years to pay for the whole of the National Health Service…Britain's more flexible economy would mean that once a member of the euro, the UK economy would outperform its more economically-rigid neighbours," argued Blair (Ahmed 2003). Reduced costs due to a lack of a need for currency exchanges would facilitate trade and travel, it was thought. Today, however, some businesses in the United Kingdom do accept Euros as payment, even though they are not required to do so.